Tuesday, April 30, 2019

The Cancer Industry Profits

Not content upon killing and harming people, the cigarette industry even tries to avoid paying their share of healthcare and treatment of their victims

British American Tobacco has been accused of depriving developing countries of hundreds of millions of dollars in tax by using “financial manoeuvring” to shift profits to a UK subsidiary.  BAT, the world’s largest tobacco company, would avoid paying $700m (£540m) between now and 2030 in Bangladesh, Indonesia, Kenya, Guyana, Brazil, and Trinidad and Tobago.

In 2016 alone BAT managed to shift $941m, roughly 12% of its group pre-tax profit that year, from overseas companies into its British subsidiary, BAT Holdings. This reduced the company’s tax bill, partly because UK corporation tax is charged at 19% – lower than many of the countries in which BAT sells cigarettes.

Tax Justice Network said BAT’s practices “fly in the face of tobacco companies’ claims to be essential tax providers to low and middle income countries where 80% of the 1.1bn smokers worldwide live”.

The campaign group’s chief executive, Alex Cobham, said: “Cigarettes not only impose massive human costs, those who profit from them are actively depriving lower-income countries of the public funding they need to provide people with health services. At a minimum, governments must require tobacco companies to publish country by country reporting to make sure profits are taxed in the communities where they were raised, not in the tax havens they were siphoned off to.”
BAT had managed to shift profits from developing countries to its UK subsidiary, which pays relatively little corporation tax using a variety of methods. They include arrangements where an overseas company pays royalties to the UK business, and charging foreign subsidiaries interest fees on loans, some routed through low-tax areas such as the Netherlands. The Tax Justice Network said the picture was incomplete because BAT had more than 100 offshore subsidiaries in 19 tax havens where financial data is opaque, while the company’s accounts also revealed hundreds of millions of dollars paid in unexplained “other operating charges”
In Bangladesh, for instance, it said BAT’s outpost there declared $21m in obligations owed to British subsidiaries between 2014 and 2016, in royalties, technical and advisory fees and IT charges. The payments meant that, rather than paying tax on those profits at local rates, the company paid a much lower “withholding tax rate” set by a bilateral treaty between the UK and Bangladesh. It said this cost Bangladesh $5.8m in lost tax in 2016, enough to cover the country’s health expenditure for more than 200,000 people for a year. The annual economic cost of tobacco consumption in Bangladesh, where 40% of men over 15 smoke daily, is $1.8bn and smoking causes more than 25% of deaths among men

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